State v. Pescatore

• Decision Date: 03 October 1986
• Parties: STATE of New Jersey, Plaintiff-Appellant, v. Rocco PESCATORE, et al., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 22

213 N.J.Super. 22

516 A.2d 261

STATE of New Jersey, Plaintiff-Appellant, v. Rocco PESCATORE, et al., Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Sept. 15, 1986.

Decided Oct. 3, 1986.

Patricia E. Stern, Deputy Atty. Gen., for appellant (W. Cary Edwards, Atty. Gen., attorney; Patricia E. Stern, of counsel and on the letter brief).

Philip De Vencentes, Hackensack, for respondent Rocco Pescatore (Galantucci & Patuto, attorneys; Philip De Vencentes, on the letter brief).

Robert M. Biagiotti, Hackensack, appeared on behalf of respondent Carmine Pescatore (Biagiotti, Marino, Montecallo & Diktas, attorneys), and relied on the letter brief filed on behalf of Rocco Pescatore.

Alfred C. Pescatore, Jr., Hackensack, appeared on behalf of respondent Carmroc Corp. (Albert & Pescatore, attorneys), and relied on the letter brief filed on behalf of Rocco Pescatore.

Before Judges PETRELLA, BILDER and GAYNOR.

PER CURIAM.

The State of New Jersey appeals from the dismissal of a criminal indictment against Carmroc Corporation, trading as Spartan Furniture of West New York, and two individual defendants, Rocco Pescatore and Carmine Pescatore. The indictment charged the defendants with third degree theft of sales taxes collected ( N.J.S.A. 2C:20-9), third degree misapplication of entrusted property, sales tax receipts ( N.J.S.A. 2C:21-15), and 21 additional violations under the New Jersey Sales and Use Tax Act ( N.J.S.A. 54:32B-1 to 29) (Sales Tax Act) and the State Tax Uniform Procedure Law ( N.J.S.A. 54:48-1 to 54:52-4). ¹

The trial judge, relying on the reasoning in People v. Valenza, 60 N.Y.2d 363, 469 N.Y.S.2d 642, 457 N.E.2d 748 (Ct.App.1983), concluded that a criminal prosecution for a Sales Tax Act violation can only be brought within the provisions of the Sales Tax Act, thereby limiting criminal prosecution to the disorderly persons penalty prescribed by N.J.S.A. 54:32B-26(b). On this appeal the State argues that the disorderly persons penalty prescribed by N.J.S.A. 54:32B-26(b) is not the exclusive penalty for violations of the Sales Tax Act, and that the indictment, founded upon statutory provisions outside of that act, should be reinstated.

The indictment was based upon claims that defendants allegedly failed to remit approximately $34,000 in State sales taxes which had been collected by them, and had intentionally filed false quarterly returns for the periods involved. The State contends that its proofs would show that in some cases the defendants sought to avoid charging the sales tax by putting out-of-state customer addresses on invoices when, in fact, delivery was to be made in New Jersey. In other cases defendants allegedly charged the tax to the customer, but failed to remit the tax. The State alleges that false tax returns were being filed during the course of this conduct. In seeking the indictment the Attorney General's office obtained and utilized defendants' tax records.

There is no dispute that the provisions of N.J.S.A. 54:32B-26(b) encompass the conduct alleged to have been engaged in by defendants. Indeed, defendants rely on this provision in contending that the disorderly persons penalties of subsection (b) are the exclusive criminal sanction for violations of the Sales Tax Act. However, defendants argue that a correct interpretation of this provision effectively precludes the State from seeking harsher criminal penalties. Specifically, defendants argue that the State may not proceed under subsection (a) which incorporates by reference the State Tax Uniform Procedure Law, N.J.S.A. 54:52-1, et seq., which makes the filing of false returns, false swearing and maintaining false books a misdemeanor ( N.J.S.A. 54:52-1, 3 and 4) or under the Criminal Code, N.J.S.A. 2C:1-1, et seq., specifically those provisions which make theft ( N.J.S.A. 2C:20-9) and misapplication of entrusted property ( N.J.S.A. 2C:21-15) third degree crimes.

N.J.S.A. 54:32B-26 provides:

(a) Any person failing to file a return or to pay or pay over any tax to the director within the time required by this act shall be subject to such penalties and interest as provided in the State Tax Uniform Procedure Law, subtitle 9 of Title 54 of the Revised Statutes. Unpaid penalties and interest may be determined, assessed, collected and enforced in the same manner as the tax imposed by this act.

(b) Any person failing to file a return or failing to pay or pay over any tax required by this act, or filing or causing to be filed, or making or causing to be made, or giving or causing to be given any return, certificate, affidavit, representation, information, testimony or statement required or authorized by this act which is willfully false, or willfully failing to file a bond required by this act, or failing to file a registration certificate and such data in connection therewith as the director by regulation or otherwise may require, or to display or surrender a certificate of authority as required by this act, or assigning or transferring such certificate of authority, or willfully failing to charge separately the tax herein imposed or to state such tax separately on any bill, statement, memorandum or receipt issued or employed by him upon which the tax is required to be stated separately as provided in subsection (a) of section 12, or willfully failing to collect the tax from a customer, or referring or causing reference to be made to this tax in a form or manner other than that required by this act, or failing to keep any records required by this act, shall, in addition to any other penalties herein or elsewhere prescribed, be a disorderly person. (Emphasis supplied.) (Footnotes omitted.)

Defendants argue that in providing that "any person failing to file a return or to pay or pay over any tax ... shall be subject to such penalties and interest as provided in the State Tax Uniform Procedure Law," subsection (a) of N.J.S.A. 54:32B-26 refers only to the civil penalties set forth in N.J.S.A. 54:49-3 to 10. They also argue that the term "penalties," absent clear proof to the contrary, should be deemed to mean civil penalties, relying on United States v. Ward, 448 U.S. 242, 248-249, 100 S.Ct. 2636, 2641-2642, 65 L.Ed.2d 742, 749-750 (1980); In re Garay, 89 N.J. 104, 112, 444 A.2d 1107 (1982) and In re Kaplan, 178 N.J.Super. 487, 493, 429 A.2d 590 (App.Div.1981). However, these cases arose in the context of the constitutional prohibition of ex post facto laws for criminal penalties rather than civil penalties. In some instances the statutory characterization of penalties as "civil" may be considered dispositive in negating criminal penalties. See In re Kaplan, supra, 178 N.J.Super. at 493-494, 429 A.2d 590. However, there is no restriction expressed in either subsection (a), which also prohibits the same conduct ² alleged to have been engaged in by defendants, or in subsection (b), which compels the conclusion that aside from the disorderly persons offense the State should be limited to pursuing civil penalties or remedies. Nor is the term "civil penalties" used in the subject statute. We are thus constrained to reject defendants' arguments. The term "penalty" is a broad term and is one commonly applied in the criminal law. See Fulginiti v. Cape May County Sheriff's Dept., 199 N.J.Super. 56, 66-68, 488 A.2d 250 (App.Div.1985), aff'd and remanded to Civil Service Commission, 102 N.J. 309, 508 A.2d 193 (1985).

In our view the trial judge unduly restricted the language of subsection (b) of N.J.S.A. 54:32B-26 by limiting it only to the criminal penalties prescribed in the Sales Tax Act. People v. Valenza, supra, 469 N.Y.S.2d 642, 457 N.E.2d 748, relied on by the trial judge, was decided under a similar, but not identical New York tax statute. Compare McKinney's Tax Law § 1145 as then in effect. In Valenza the proscribed conduct involved a failure to remit sales taxes collected. This conduct was covered only in subsection (a) of the New York statute which provided specific civil penalties, and was not included among the specific acts subject to the criminal sanctions authorized by subdivision (b). The New York Court of Appeals in that case found that the legislature did not intend to make the failure to remit sales taxes a criminal offense under the statute as then written, ³ and barred a prosecution for embezzlement. 469 N.Y.S.2d at 644-645, 457 N.E.2d at 749-751.

Subsequent New York cases were apparently not brought to the attention of the trial judge. In People v. Walsh, 108 A.D.2d 464, 489 N.Y.S.2d 933 (App.Div.1985), aff'd 67 N.Y.2d 747, 500 N.Y.S.2d 96, 490 N.E.2d 1222, 1986), a taxpayer was indicted for filing a false return, which was made a crime by subdivision (b). A result contrary to that in Valenza was reached and the court held that this violation would not preclude the filing of a larceny indictment. See also People v. Cohen, 123 Misc.2d 97, 473 N.Y.S.2d 109 (Sup.Ct.1984).

Under our rules of statutory construction the language of a statute should be given its ordinary meaning and construed in a common sense manner to accomplish the legislative purpose. In re Barnert Memorial Hospital, 92 N.J. 31, 455 A.2d 469 (1983); Errichetti v. Merlino, 188 N.J.Super. 309, 318, 457 A.2d 476 (Law Div.1982); Mulcahy v. Bergen County Board of Elections, 156 N.J.Super. 429, 440, 383 A.2d 1214 (Law Div.1978).

In prohibiting the same conduct, the subsections of N.J.S.A. 54:32B-26 do overlap. Merely because N.J.S.A. 54:32B-26(b) deals specifically with offenses relating...